Eurofer opposes BHP Billiton/Rio Tinto joint venture

Archiv – Europe | ’In a global market already dominated by an oligopoly with just three suppliers – Vale, Rio Tinto and BHP Billiton – and in which the price of the iron ore has already reached a historical high in 2008, a joint venture of Australian iron ore assets is fundamentally against the interests of the steel industry, European consumers and the European economy,’ Gordon Moffat, Director General of the European Confederation of Iron and Steel Industries (Eurofer), has said in response to attempts by BHP Billiton to seal a joint venture with Rio Tinto.Europe | ’In a global market already dominated by an oligopoly with just three suppliers – Vale, Rio Tinto and BHP Billiton – and in which the price of the iron ore has already reached a historical high in 2008, a joint venture of Australian iron ore assets is fundamentally against the interests of the steel industry, European consumers and the European economy,’ Gordon Moffat, Director General of the European Confederation of Iron and Steel Industries (Eurofer), has said in response to attempts by BHP Billiton to seal a joint venture with Rio Tinto.
’If allowed to proceed, the joint venture will restrict competition in relation to the fundamental competitive parameters in the sea-borne iron ore markets: price, volume and quality,’ Mr Moffat contends. ’Therefore, Eurofer has requested the European Commission to exercise jurisdiction over this new transaction and carefully investigate its impact on free competition.’
Under the proposed venture, BHP Billiton and Rio Tinto will develop a joint view about the perceived demand and supply balance and will not constrain each other during benchmark negotiations where prices and volumes are fixed, says Eurofer. According to the steel association, these companies will have identical output available and full knowledge of each other’s volume. Incentives for further iron ore capacity and infrastructure investment will be seriously constrained by the creation of the joint venture, it adds.
According to Eurofer, the joint venture would have the same impact on the iron ore market as would have had the original full merger proposal to which the European Commission comprehensively objected last year. ’There is no reason for the Commission to take a more positive view of this current JV proposal,’ the confederation states.